Democracy in Chains
Page 26
Buchanan dismissively explained the disappointing outcome by concluding, once again, that most people desired to remain, as he put it, in “dependency status.”12 What Charles Koch concluded is not recorded in the available documentation, but what we do know is this: rather than throw up his hands in despair, he decided to double down and “speed up the whole process” of radical transformation. He let go of his earlier demand for ideological consistency, a demand that was nonnegotiable for him in the 1970s; now what mattered was practical “results.”13 But how to achieve them?
Koch had been giving to Buchanan’s center as well as Henry Manne’s Law and Economics Center at George Mason University since the mid-1980s—along with other radical right efforts. He knew Buchanan’s signature ideas, having invited him to more than one discussion. But it was only now, when his mind was laser-focused on producing results, that he circled back to the Nobel laureate and ultimately decided that the missing piece he was looking for was close at hand. There was one thinker in the movement who did more than just elaborate on the vision of a just society laid out by his intellectual heroes, von Mises and Hayek, both now deceased. Only James Buchanan had also developed an operational strategy for how to get to that radically new society, one that took as axiomatic what both Buchanan and Koch understood viscerally: that the enduring impediment to the enactment of their political vision was the ability of the American people, through the power of their numbers, to reject the program. What was holding the movement back now became clear: the lack of a strategy to break that power, or at least to debilitate it, the very approach Buchanan had spent a lifetime thinking about and designing.
Operationally, as Buchanan had repeatedly explained, such a program must ultimately change the rules, not simply who rules. In the near term, it had to have two components. First, it had to create a pathway from here to there that could be executed in small, piecemeal steps that on their own polled well enough with the American people that they could win passage without raising the public’s ire. But each step had to connect back to the previous step and forward to the next one so that when the entire path was laid, all the pieces would reinforce the route to the ultimate destination. By then it would be too late for the American public to cry foul.
Second, and as important, because some of those piecemeal steps, no matter how prettified, could not be fully disguised, where necessary they had to be presented to the American public as the opposite of what they really were—as attempts to shore up rather than ultimately destroy—what the majority of Americans wanted, such as sound Medicare and Social Security programs. For such programs, the framing should be one of the right’s concern to “reform” the programs, to protect them, because without such change they would go bankrupt—even though the real goal was to destroy them. For both men, the ends justified whatever means seemed necessary, although those means should remain technically within the law.
While many details are lodged in private records beyond the reach of researchers, it is clear that Koch had so convinced himself of the goodness of his self-appointed mission and of the “prosperity and social well-being” it would bring that he had no moral doubts about the duplicity of the plan he was about to throw his weight behind.14 He trusted his superior intellect. Buchanan also had something of a God complex that seemed to free him, too, of moral uneasiness, as his aid to Chile’s junta showed. What remained to be seen was how these two men would get along once they had to work together to achieve their vision. “Hawks,” the novelist Ernest Hemingway once memorably observed, “do not share.”15
• • •
The message Koch delivered in January 1997, along with the $10 million gift he pledged to support a new and enlarged James Buchanan Center, made clear that he believed he had found the missing tool he had been searching for, the one that would produce “real world” results. James Buchanan’s theory and implementation strategies were the right “technology,” to use Koch’s favored phrase. But the professor’s team had not employed the tools forcefully enough to “create winning strategies.” Koch chastised gently at first: “Since we are greatly outnumbered, the failure to use our superior technology ensures failure.”16
In essence, he was saying to Buchanan’s cadre: You have a novel analysis of how government grew over the twentieth century to become the Leviathan we detest. I believe your analysis is so valuable to the cause that I am investing $10 million in your work over the next few years, with more to come if I like what I see. Now, use your understanding to take down the beast. Don’t go for small gestures. Go for the big win. “Our skepticism,” he said pointedly to any who might hesitate, “needs to be directed toward rationalizations for not applying the framework rather than toward the framework itself.” Indeed, Koch concluded his challenge to them by equating the project to the Protestant Reformation, waged by Martin Luther against the corrupt hegemon of an earlier century.17
The Mont Pelerin Society’s golden anniversary provided an opportunity for Buchanan and his colleague Henry Manne, the newly retired dean of the George Mason School of Law, to define the content of the push to come. Manne had by then more than proved his value to Koch. His summer legal programs had provided intensive training in applying free market economic analyses to legal decision-making for law professors and for federal judges, luring them with luminaries and luxury accommodations. To name just one index of how successful Manne had been: by 1990, more than two of every five sitting federal judges had participated in his program—a stunning 40 percent of the U.S. federal judiciary had been treated to a Koch-backed curriculum.18
Not surprisingly, early discussion between Manne and Buchanan identified several barriers to economic freedom to be overcome. Excessive “government regulation of business” was an overarching theme, with the biggest threat, the two men now determined, coming from the environmental movement. Because environmentalists were, in the eyes of Manne and Buchanan, on a “quest for control over industry,” they had to be not merely defeated, but defamed, with their personal “hidden agenda” exposed.19
Another impediment to the society’s vision of liberty was government-backed “health and welfare,” which impaired “the normal workings of labor markets.” Social Security, Medicare and Medicaid, employer-provided pensions and insurance: all those needed to be phased out—or, rather, over time, converted to individual savings accounts.20
“Any modern democracy’s tax policy” was likewise trouble, because the voters’ “inevitable egalitarian instincts” would lead them, if unobstructed, to “redistribution.”21 To solve this problem, they had to bring about the end of the graduated income tax adopted after 1913 with passage of the Sixteenth Amendment, in favor of a single-rate flat tax.22
Another absolutely critical target for the new century, they agreed, should be education. As “the most socialized industry in the world,” the GMU team complained, public schools, from kindergarten through university, nurtured “community values, many of which are inimical to a free society.” Its continuing dominance was an affront to the cause that, since Milton Friedman’s 1955 manifesto, had sought to end the “government monopoly” of schooling.23
Finally, the golden anniversary discussions should also figure out how to deal with feminism, which the men found to be “heavily socialistic for no apparent reason.”24 A kind of cultural war was therefore in order against this movement that relied so heavily on government action.25
The two men, it should be noted, acknowledged the surprising resilience of the enemy. But whom they defined as the “enemy” may surprise you. It was not, as most of us would assume, liberalism. It was socialism.
Soon after the collapse of the Soviet Union, Buchanan had observed that “‘socialism in the small’ [was] on the ascendency.”26 What he was referring to was not what you and I were taught in school as the definition. Socialism, as the Mont Pelerin Society members defined the term, was synonymous with any effort by citizens to get their government to a
ct in ways that either cost money to support anything other than police and military functions or encroached on private property rights. By that definition, socialism was indeed alive and well in the 1990s.
What concerned them even more was that it was not just liberals who exhibited these socialistic tendencies. By 1990, with the fall of the Soviet Union, even conservative heads of state such as George H. W. Bush and Margaret Thatcher no longer saw the need to devote vast sums to an arms race and a Cold War against the USSR. But rather than return that money to the people from whom they took it—the wealth makers—they were speaking of a “peace dividend,” of shifting vast sums of money from the military to home-front concerns.27
Abetting that socialist tendency, Buchanan and Manne believed, was passage of the National Voter Registration Act of 1993, a measure pushed for by organizers of low-income Americans who wanted to bring their voices into the political process. As Alex Keyssar writes in his history of voting in America, the National Voter Registration Act “was the final act of the drama that had begun in the 1960s; it completed a lurching yet immensely important forty-year process of nationalizing the voting laws and removing obstacles to the ballot box” that had been put in place from the 1850s to World War I to deter nonelite voters. It instructed states to facilitate participation in elections by allowing citizens to register by mail, when visiting public agencies for assistance, or when obtaining or renewing licenses at motor vehicle facilities (hence its nickname, the Motor Voter Act). By 1997, nine million net new voters had joined the electorate.28 To believers in voting rights, it was a huge achievement. To those who scorned the idea of a broad and inclusive electorate, it was cause for mourning. “We are increasingly enfranchising the illiterate,” grumbled Jim Buchanan, “moving rapidly toward electoral reform that will not expect voters to be able to read or follow instructions.”29 It could have been Harry Byrd speaking.
But for Koch, now there was finally a way to stop all this. The answer he had spent his entire adult life looking for was at hand. There was no time to waste. Three million of the $10 million grant, Koch announced, would be given out in the first installment, with a reorganization to suit the plan. Buchanan’s Center for Study of Public Choice and the fast-growing Center for the Study of Market Processes, which had been brought to GMU by Richie Fink in 1980, would now both become divisions of the new James Buchanan Center for Political Economy at George Mason University. Fink was overseeing the merger while also serving as director of the Charles Koch Foundation, executive vice president of Koch Industries, and Koch’s master political strategist, even though not long before he had been Buchanan’s junior colleague at George Mason. Notably, the ten-year agreement, lasting until 2008, made Buchanan and Koch, rather than Buchanan and Fink, the cochairs of the governing board of the combined center. According to its charter document, the center’s nonprofit, tax-deductible mission was “conducting world-class research, education and outreach on political economy and related topics.”30
Yet if Buchanan was reassured that Fink had not been named his coequal, he soon discovered that he had let down his guard unwisely. Koch was known for wanting to maintain control over enterprises in which he invested; large contributions to nonprofits were no different, in his mind, from commercial investments. It was his money. Where George Mason was concerned, he and his team were shrewd enough to know they did not need to take over the whole university, which might attract attention and protest (and cost more), but just the corner they needed in order to accomplish what they wanted to in the wider world. And now, with Buchanan to be counted in that corner, as a veritable acquisition among others, Richie Fink bragged to him, “We have you, some talented faculty, the B[oar]d of Visitors [which now included such top libertarian cadre members as Dick Armey, Ed Feulner of the Heritage Foundation, Weekly Standard editor William Kristol, James C. Miller III, and, of course, Fink himself], the Administration [namely, the president, Alan Merten, and the provost, David Potter], a capable staff, the Governor, former Governor (maybe the next governor), many state legislators, a plethora of funders, the law school dean [Mark F. Grady] and some law school faculty all in support of the concept we discussed.” The unspoken message was that the Koch operation had learned a lot from what had happened to Mont Pelerin outposts at other institutions, including Chicago, UCLA, and Buchanan’s own previous Virginia bases.31 Before long, Buchanan was to learn what the Koch people took from those lessons. It was not what he was expecting.
While some of those brought in by the Koch team to staff the outreach project were trained academics, most were not. They were operatives, pure and simple, doing the take-no-prisoners work that operatives everywhere are paid to do, and they were legion. Apparently Buchanan never gave a thought to the possibility that these operatives would not be constrained by the fact that, although they were working for Koch, who had made clear that he expected big and bold steps, they were now operating under the cover of an academic institution and therefore must take those big steps in a quiet manner.
But they were blissfully unaware of any need for restraint. While Buchanan’s various centers had done extensive “outreach” throughout their existence, Koch’s team was redefining “outreach” as whatever was necessary to win the war. And apparently, no one took the time to sit down with the Nobel laureate, the star on their masthead, and explain all this to him, or alert him that, although he and Koch were ostensibly codirectors of the new Buchanan Center, it was Koch who was really in charge. The CEO’s right-hand man, Fink, would continue to offer unctuous reassurances whenever Buchanan might question something, and make sure to shower him with flattery and prestigious-sounding titles. But defer to him on operations? No way.
Still, Buchanan understood better than Koch that the ball of fire they were putting in play might come back to burn them. And initially he was right. The new combined operation almost crashed before it really got started, as a result of the crude tactics the operatives employed, inadvertently giving the rest of us a taste of what was to come as the twentieth century gave way to the twenty-first.
• • •
As one of her first acts as a member of the new Buchanan Center board appointed by the Koch team, Wendy Lee Gramm blasted out a nine-page fund-raising letter in May 1998 to appeal to potential donors who, like Koch, were “frustrated our freedoms haven’t advanced more.” She offered them “one of America’s best-kept secrets,” the James Buchanan Center, as a novel vehicle for advancing “personal liberty and economic freedom.” She explained that “coming from a university, the Buchanan Center’s ideas pack power and credibility.”32
Then, laying claim to the authority of Buchanan’s Nobel Prize, she boasted of the unique “outreach” work the center was doing to promote deregulation and market-based politics. She was outlining, in print, the vision for how this base camp at a public university would seek to influence government. “Through specialized seminars,” the center “reaches out to key, influential policymakers—U.S. Senators, Congressmen and state legislators, legislative staff and regulators”—to tutor them in how to “apply free market principles to public policy work.” “Over half of congressional offices, from both sides of the political aisle, send staff to Buchanan Center events,” her fund-raising letter bragged. If that was not enough, “more than one-third of the federal judiciary have participated” in GMU programs that taught them to apply free-market economics in judging legal cases.33
If any potential donor still had doubts, Gramm made clear that, unlike other universities, George Mason was no ivory tower. “With its close proximity to Washington, D.C., the Buchanan Center is uniquely positioned to advance freedom . . . to the very people who’ll make a difference.” As a case in point, she highlighted the efforts of House Majority Leader Dick Armey, who was then promoting radical cuts in personal, corporate, and capital gains taxes. (She might have added her husband and fellow economist, Phil Gramm, a sitting U.S. senator who was Armey’s counterpart in the upper c
hamber of Congress, where he was pushing for deregulation of the financial sector.)34
This fund-raising appeal was not just a deviation from academic norms and from the more scholarly fund-raising efforts Buchanan had spearheaded his entire academic career; it may have broken the law. The center had been chartered as a nonprofit entity, a 501(c)(3), which made it a tax-deductible charity for IRS purposes—a status that requires abstention from partisan activity. And someone, who chose not to reveal his or her identity, took the time to send Buchanan, as well as the chair of the economics department at GMU and the dean of the college, copies of the letter Gramm had sent out, pointing out that her solicitation “involves clear violations” of tax law. Surely, he or she said, something had to be done about “the blatant political activities of the JBC.”35
The dean of the college, who had not been consulted about the fundraising letter or its contents, as well as a few faculty members in the economics department who were not involved with the Buchanan Center, bristled at the naked power play by the cadre. They expressed alarm to the president and the provost that “the JBC tie with Koch may ‘politicize’” its members’ scholarship. Once the scheme was exposed, others began protesting more vocally. Robert Tollison, a Buchanan student from the University of Virginia era who was now on the economics faculty at GMU and the chief faculty overseer of the project, reported to Koch that some colleagues had stopped speaking to him. Even those “folks who allegedly share our interests in entrepreneurship and market-based teaching and research” proved themselves to be “pseudo-libertarians,” Tollison complained. They were “defiantly critical” of Charles Koch, Richie Fink, and “Koch funding in general.”36